Reserve Bank of India hikes repo rate to contain inflation

Mumbai, Jun 11: The Reserve Bank of India (RBI) on Wednesday raised the repo rate by 25 basis points to 8 per cent to check inflation.The surprise hike, which was announced after market hours, prompted several banks to acknowledge that they might raise interest rates after an unequivocal signal from the central bank.

The reverse repo rate, at which RBI borrows money from banks in exchange of the government papers, however, has been kept in tact at 6 per cent. The Reserve Bank said the decision has been taken with a view to containing inflation expectations among other things. It is learnt that the asset-liability committee of the State Bank of India (SBI) is set to meet on Friday and the country"s largest bank may choose to revise interest rates in some categories.